If you’re considering starting up a business, you first need to critically examine whether your business idea is of a high enough quality and whether it will be profitable. Many people set up in business because they have skills in a particular sector, for example, hairdressers often decide to open a hair salon. Unfortunately, however, simply having a good knowledge or talent in a particular area doesn’t guarantee business success.
To ensure that your intriguing idea is something that will really make you a profit ask yourself the following questions:
Does the product have a repeat buy potential? This is an essential if you are to be assured long term business success. You need to not only focus on getting that first customer but on turning them into profitable long term buyers.
Will there be a big enough profit margin? Very few traders can compete on price alone over the long term – especially smaller businesses. You need to assess cash flow going forward and ensure there will be enough capital to keep you going in the early stages when profits will be lower.
Your personality will dictate whether starting a business is for you
Starting a new business is incredibly hard work. You will need to put in lots of hours, and have the confidence that you can get through the tough times. And even if you possess a true entrepreneurial spirit there needs to be structure to your actions to make your business success a reality.
Being passionate about what you’re doing does help. You also need to be a risk-taker to a certain extent and not be afraid of failure. However, these risks must be calculated risks - the best entrepreneurs seem to have a knack for finding the ‘next big thing’.
If you don’t yet have the skillset or right business idea don’t worry. You can learn how to develop the right character traits - read up business success stories and check out website tutorials to help you build up self-esteem. For practical help on starting a business, including deciding on a business idea check out gov.uk advice.